Sickness insurance in 2009
Contens:
- Introduction
- General information
- Participation in sickness insurance
- Sickness insurance benefit system
- Exercise of the entitlement to sickness insurance benefits
- How benefits are paid
- Employer obligations in sickness insurance
- Information about premiums for sickness insurance
Introduction
The sickness insurance system is intended for people in remunerative work, for whom it provides security through financial sickness insurance benefits in cases of so-called short-term social events (temporary inability to work due to an illness, injury or quarantine, caring for a family member, pregnancy and maternity or caring for a child).
General information
From 1 January 2009, sickness insurance will be regulated through the new Act No. 187/2006 Coll. on Sickness Insurance, as amended. This Act was approved on 14 March 2006 and was to have come into effect on 1 January 2007, but this has been postponed by 2 years.
It represents a comprehensive regulation of sickness insurance that includes:
- The types of people participating in sickness insurance (meaning employees, members of the armed forces and safety brigades, and self-employed people),
- The entitlements of these people from sickness insurance and a stipulation of the amounts of the benefits provided,
- Health assessment for sickness insurance purposes,
- The organisational form of sickness insurance,
- Management in sickness insurance.
Premiums for sickness insurance remain regulated by Act No. 589/1992 Coll. on Premiums for Social Security and Contributions to the State Employment Policy, as amended.
Participation in sickness insurance
The nationality of the insured person is irrelevant for the purposes of sickness insurance pursuant to the Sickness Insurance Act.
Employees and self-employed people are participants in sickness insurance.
- Employees remain compulsory participants in sickness insurance.
- Sickness insurance remains voluntary for self-employed people.
An employee is subject to compulsory participation in sickness insurance if he/she fulfils 3 basic conditions stipulated by the Sickness Insurance Act, namely:
- The performance of work in the Czech Republic in employment through a labour or employment contract that can form the basis for participation in sickness insurance,
- The length of the employment, which is stipulated as a minimum number of days (the employment lasted or should have lasted at least 15 calendar days),
- The minimum arranged income (this is the so-called decisive income, the boundary of which is CZK 2 000, and which will be raised according to the development of the average salary).
Special conditions for the participation of employees in sickness insurance are stipulated for the performance of low-remuneration employment. Low-remuneration employment is understood to be employment that fulfils the conditions for the performance of employment in the Czech Republic and the duration of the employment, but does not fulfil the condition of minimum arranged income from employment (meaning at least CZK 2 000 in 2009). When performing low-remuneration employment the employee is insured only in those calendar months in which he/she achieved at least an income of the applicable decisive amount valid as of 1 January of the calendar year in question (at least CZK 2 000 in 2009).
Pursuant to the new sickness insurance legislation a self-employed person may also be a participant in sickness insurance if he/she is performing remunerative activity outside the Czech Republic but on the basis of authorisation arising from the legal regulations of the Czech Republic. For self-employed people participation in sickness insurance is not conditional on his/her participation in pension insurance. Self-employed people can thus apply for participation in sickness insurance (and pay premiums for sickness insurance) even if they do not participate in pension insurance, or are not obligated to pay deposits for premiums for pension insurance. The conditions for participation in insurance for self-employed people are however made stricter through the fact that this insurance expires on the first day of the calendar month for which the self-employed person did not properly pay the premium (until now there had to be three consecutive months of non-payment of premiums for sickness insurance).
In comparison with the current regulation those insured through sickness insurance from 1 January 2009 do not include
- Members and corporate agents of limited liability companies and limited partners in limited partnership companies,
- Members of cooperatives where employment with the cooperative is not a condition of membership,
- Students and pupils.
There is a new obligation for participation in sickness insurance for people who are, pursuant to a special Act, named or elected to the function of head of an administrative authority or to a function of statutory body of a legal entity established through a special Act, or to the function of representative of such head or statutory body, if such head or statutory body is only a single individual, and the appointment or election does not place on those individuals any working or service relationship, and for people who, pursuant to a special Act, perform a public function outside a working or service relationship if the Labour Code applies within the stipulated scope to their employment.
Insured people will also newly include the category of contracted employees and foreign employees.
- A contracted employee is an employee of an employer whose registered offices is located in a non-treaty country, meaning a state outside the European Union or outside one of the states with which the Czech Republic has a concluded international treaty on social security, if he/she is actively working in the Czech Republic at an employer with registered offices in the Czech Republic; such employees are obligated to participate in sickness insurance (if the stipulated conditions are fulfilled).
- A foreign employee is an employee of an employer whose registered offices is located in non-treaty country, if he/she is actively working in the Czech Republic directly to the benefit of that foreign employer; such employees may be participants in sickness insurance only on a voluntary basis under the same conditions that apply for self-employed people, if they themselves also comply with the obligations that in other cases the employer would comply with.
Sickness insurance benefit system
(The following information only applies to sickness insurance benefits to which entitlement arose after 31 December 2008. This information does not apply to benefits whose entitlement was transferred from 2008 to 2009).
4 types of financial benefits will continue to be provided from sickness insurance, namely:
- Sickness benefits
- Maternity benefits
- Care benefits
- Pregnancy and maternity compensation benefits
- Sickness benefits are paid always from the 15th calendar day of duration of a temporary inability to work and per calendar day. After the first 14 calendar days an employee whose employment relationship with an obligation for participation in sickness insurance remains effective will receive salary compensation from the employer. The salary compensation is per working day and, in the event of temporary inability to work, from the 4th working day (in the event of quarantine from the 1st working day).
- Maternity benefits, care benefits and the pregnancy and maternity compensation benefits will continue to be paid from the origin of the social event, per calendar day.
In the event of more than one concurrent entitlement to the same benefit from more than one employment with an obligation to participate in sickness insurance, only one benefit will be provided from all the employments, and this will be calculated from the incomes achieved from all these employments.
1. Sickness benefits
An employee who is declared temporarily unable to work by a physician is entitled to sickness benefits from the 15th calendar day of the duration of this temporary inability to work until the end of the temporary inability to work, but for a maximum of 380 calendar days beginning from the origin of the temporary inability to work (including any previous duration of temporary inability to work falling within the period of one year before the origin of the current temporary inability to work).
There is also an entitlement to sickness benefits in stipulated cases, if the commencement of the temporary inability to work occurred after the end of the insured employment in the so-called protected period. The protected period in the case of the exercise of the entitlement to sickness benefits is 7 calendar days from the date of the end of the employment with an obligation to participate in sickness insurance.
2. Maternity benefits
The basic conditions for entitlement to these benefits have remained intact. On the day on which it should be recognised, the individual must still be participating in sickness insurance or in the protected period and, in the last two years before this date the individual must have participated in sickness insurance for at least 270 days.
The new Act permits the mother of the child to alternate with her husband or the father of the child in the care for that child, while each of them is, in relation to this care for the child, entitled to the payment of maternity benefits for the period and under the conditions stipulated by the Sickness Insurance Act. This alternation is permitted from the start of the 7th week from the date of birth and the frequency of such alternation is not restricted. In the event of alternation in the care for the child the payment of maternity benefits to the mother is stopped and it is then paid to the man from his sickness insurance, if he fulfils the conditions for entitlement to its payment, and vice versa.
For women whose insured employment ended during pregnancy, the protected period for the entitlement to maternity benefits is the same number of calendar days as the duration of her last employment, up to a maximum of 180 calendar days.
3. Care benefits
Employees are entitled to care benefits (formerly family member care benefits) if they are unable to work because:
- They are caring for an ill member of their household, or
- They are caring for a healthy child under 10 years old, because their educational or child-care facility was closed (due to an accident, epidemic or other unforeseeable event), the child was quarantined, or if the person who otherwise cares for that child falls ill.
An employee cannot exercise an entitlement to care benefits for a child regarding which the other parent (as a rule) has already exercised their entitlement to maternity benefits or the parental contribution.
If stipulated conditions are fulfilled, there is a new option to grant for a single care need, care benefits successively to two people.
No protected period for care benefits has been stipulated.
4. Pregnancy and maternity compensation benefits
An insured person is entitled to these benefits if, due to pregnancy, maternity or breastfeeding, they were transferred to a different type of work and for this reason have a lower income than before the transfer.
The new Act will not bring any significant amendments in regard to these benefits. Only the conditions for entitlement to the pregnancy and maternity compensation benefits have been expanded; there is also an entitlement to these benefits in the event an employee was transferred to different work as a result of breastfeeding.
5. Calculation of sickness insurance benefits
Stipulation of the daily assessment base
Benefits will continue to be calculated from the daily assessment base, which is calculated by dividing the contributing income received by the employee in the decisive period (as a rule a period of 12 calendar months before the calendar month in which the social event occurred) by the number of “contributing” calendar days in this decisive period. The daily income calculated in this way is subject to reduction.
Reduction to the daily assessment base
The system of reduction boundaries for the calculation of the daily assessment base, from which the benefit is calculated, will remain in place with the proviso that there will be a new third reduction boundary. The reduction boundary will be announced in the Collection of Laws of the Czech Republic through a notification from the Ministry of Labour and Social Affairs.
(In 2009 the first reduction boundary is CZK 786, the second reduction boundary is CZK 1 178 and the third reduction boundary is CZK 2 356).
Reduction is performed by including
- In the first reduction boundary
- For sickness benefits and care benefits 90% of the daily assessment base,
- For maternity benefits and the pregnancy and maternity contribution benefits 100% of the daily assessment base,
- 60% of the daily assessment base between the first and the second reduction boundaries,
- 30% between the second and third reduction boundaries
- The amount above the third reduction boundary is not taken into account.
Sickness insurance benefit amounts
The amounts of sickness benefit are
- 60% of the daily assessment base from the 15th to the 30th calendar day of the duration of the temporary inability to work,
- 66% from the 31st to the 60th calendar day of the duration of the temporary inability to work, and
- 72% from the 61st calendar day of the duration of the temporary inability to work.
The amount of the maternity benefits is 70% of the daily assessment base.
The amount of the care benefits is 60% of the daily assessment base.
Exercise of the entitlement to sickness insurance benefits
The employee submits a benefit application (as a rule issued by a physician) to his/her employer, who sends it, together with materials for stipulating the entitlement to the benefit and its payment, to the applicable District Social Security Administration. Employers also accept benefit applications from their former employees. This will be the procedure followed by all employers, meaning also those who were, from the perspective of sickness insurance, considered until 31 December 2008 as so-called organisations that administered the sickness insurance of their employees themselves.
How benefits are paid
Unlike under the legislation effective until 31 December 2008, so-called large organisations will not administer sickness insurance for their employees, but instead the applicable District Social Security Administration (and the applicable service sections).
The District Social Security Administrations are entitled to assess the benefits and, in the event all the conditions are fulfilled, to recognise them and subsequently pay them out within one month from the date on which the application was delivered to it; otherwise, it will issue a decision on the rejection of the benefits due to non-fulfilment of conditions.
The employee may choose how the benefits will be paid out
- To his/her account at a financial institution in the Czech Republic, in which case he/she will give the account number in the application,
- In cash (through a postal order); in this case he/she will pay the delivery costs.
The District Social Security Administration issues a written notification to the employee about the type of benefits paid out, the daily amount of the benefits, the amount of the daily assessment base and the period for which the benefits were paid. In the event the employee does not agree with the amount of the benefits, the District Social Security Administration will commence benefit proceedings, the result of which will be an administrative decision against which the employee may appeal.
Employers who in 2008 provided sickness insurance benefits (over 25 employees) “will complete the payment” of benefits in 2009 to which there was an entitlement in 2008 and which are transferred to 2009. The amount of the benefits will be calculated according to the “old regulations”, i.e. effective until 31 December 2008. According to the “old regulations” the reduction boundary for the calculation of the daily assessment base will always be increased as of 1 January. For these transferred benefits it will be raised from CZK 550 to CZK 610 (the first reduction boundary) and from CZK 790 to CZK 870 (the second reduction boundary). Benefits paid out must be converted as of 1 January 2009 (this applies to benefits calculated from a higher average monthly income than around CZK 16 700).
Employer obligations in sickness insurance
The District Social Security Administration will administer the sickness insurance for employees.
Employers must only perform the following tasks in sickness insurance
- reporting,
- recording,
- accepting benefit applications.
Reporting tasks
On the specified form the employer must:
- Register in the employer register at the latest within 8 calendar days from the date of its establishment,
- Deregister from the employer register within 8 calendar days from the date on which it stopped being an employer,
- Provide notification of the date of commencement of employment of an employee, and the date of termination of employment of an employee, within 8 calendar days of the start/termination of employment,
- Announce every change in information given on the specified form within 8 calendar days from the date of the change.
The employer may agree with the District Social Security Administration on a different deadline for the performance of its reporting obligations.
Recording tasks
The employer must maintain documentation about its employees that participate in sickness insurance, which must for these purposes contain the information listed in Section 95 of the Sickness Insurance Act.
The employer must keep records for a period of 10 calendar years following the year they relate to. Information in the form of accounting records is kept for a longer period.
Tasks when accepting a benefit application
The employer must accept applications from its employees (as well as from former employees) for sickness insurance benefits and other materials needed for stipulating the entitlement to their payment and, without delay, submit them together with information needed for the calculation of the benefits to the applicable District Social Security Administration. The information needed for the calculation of the benefits is submitted on the specified form.
Information about premiums for sickness insurance
Premiums for sickness insurance form part of the premiums for social security, together with premiums for pension insurance and the contribution to the state employment policy. They are regulated by Act No. 589/1992 Coll., on Premiums for Social Security and Contributions to the State Employment Policy, as amended.
The employee bears all responsibility for stipulating the correct amount of the premium that both it and the employee must pay, and for sending the premium on time.
The employer sends the sickness insurance premium together with the premium for pension insurance and the contribution to the state employment policy in a single amount to the account of the applicable District Social Security Administration between the 1st and the 20th day of the following calendar month.
The employer sickness insurance premium
In connection with the new Sickness Insurance Act employers are required to pay employees a salary compensation for the period of the first 14 calendar days of temporary inability to work. This obligation is compensated to employers through a reduction in the rate of their sickness insurance premiums. Instead of the current 3.3% they will pay 2.3% for sickness insurance in 2009 and 1.4% from 2010 from their assessment base.
In 2009 employers will be refunded half the salary compensation they paid to employees for the first 14 days of their inability to work in the form of a deduction from the sent premium. From 2010 employers who do not employ over 50 employees will be able to register in a system based around the refund of half the salary compensation and the amount of the rate for sickness insurance premiums over 1.4%.
The employee sickness insurance premium
The employees do not pay sickness insurance premium from 1 January 2009. The employees’ total rate for premiums to social security and the contribution will fall from 8% to 6.5% (comprised of 6.5% to pension insurance).